What changed in this filing

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Item 1. Financial Statements

2024-02-27 compared with 2023-12-05 · 332 added, 196 removed, 671 unchanged (44% of the section changed)

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CONDENSED STATEMENTS OF CONSOLIDATED INCOME

Three Months Ended October 31, Six Months Ended October 31,

Three Months Ended January 31, Nine Months Ended January 31,

Dollars in millions, except per share data 2024 2023 2024 2023

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CONDENSED STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME

Three Months Ended October 31, Six Months Ended October 31,

Three Months Ended January 31, Nine Months Ended January 31,

Dollars in millions 2024 2023 2024 2023

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CONDENSED CONSOLIDATED BALANCE SHEETS

Dollars in millions October 31, 2023 April 30, 2023

Dollars in millions January 31, 2024 April 30, 2023

Current Assets

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Accrued trade marketing and merchandising 239.9 187.7

Short-term borrowings 418.0 —

Current operating lease liabilities 40.6 33.2

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CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS

Six Months Ended October 31,

Nine Months Ended January 31,

Dollars in millions 2024 2023

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Amortization 135.1 166.8

Pension settlement loss (gain) 3.2 1.7

Unrealized loss (gain) on investment in equity securities – net 21.5 —

Realized loss on investment in equity securities – net 21.5 —

Share-based compensation expense 15.9 11.3

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Other noncash adjustments – net 25.5 29.3

Settlement of interest rate contracts 42.5 —

Defined benefit pension contributions ( 2.8 ) ( 72.8 )

Changes in assets and liabilities, net of effect from divestitures:

Changes in assets and liabilities, net of effect from acquisition and divestitures:

Trade receivables ( 10.8 ) ( 10.7 )

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Investing Activities

Business acquired, net of cash acquired ( 3,920.6 ) —

Proceeds from sale of equity securities 466.3 —

Additions to property, plant, and equipment ( 455.9 ) ( 332.3 )

Proceeds from divestitures – net 50.5 1.6

Other – net ( 1.5 ) 23.9

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Proceeds from long-term debt 4,285.0 —

Repayments of long-term debt ( 1,441.0 ) —

Capitalized debt issuance costs ( 32.1 ) —

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Purchase of treasury shares ( 372.5 ) ( 8.0 )

Proceeds from stock option exercises 1.2 6.1

Payment of assumed tax receivable agreement obligation ( 86.4 ) —

Other – net ( 1.2 ) 5.6

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CONDENSED STATEMENTS OF CONSOLIDATED SHAREHOLDERS’ EQUITY

Six Months Ended October 31, 2023

Nine Months Ended January 31, 2024

Dollars in millions Common

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Net income 183.6 183.6

Other comprehensive income 10.2 10.2

Other comprehensive income (loss) 10.2 10.2

Comprehensive income 193.8

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Balance at October 31, 2023 102,154,601 $ 25.5 $ 5,252.8 $ 2,051.1 $ ( 240.5 ) $ 7,088.9

Six Months Ended October 31, 2022

Net income 120.4 120.4

Other comprehensive income (loss) 13.1 13.1

Comprehensive income 133.5

Purchase of treasury shares ( 1,101 ) — ( 0.1 ) — ( 0.1 )

Issuance of shares for acquisition 3,989,915 1.0 449.2 450.2

Stock plans 33,904 — 4.1 4.1

Cash dividends declared, $ 1.06 per common share

( 116.5 ) ( 116.5 )

Balance at January 31, 2024 106,177,319 $ 26.5 $ 5,706.0 $ 2,055.0 $ ( 227.4 ) $ 7,560.1

Nine Months Ended January 31, 2023

Dollars in millions Common

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Net income 109.8 109.8

Other comprehensive income 4.0 4.0

Other comprehensive income (loss) 4.0 4.0

Comprehensive income 113.8

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Balance at October 31, 2022 106,626,536 $ 26.6 $ 5,462.0 $ 2,976.0 $ ( 247.3 ) $ 8,217.3

Net income 208.5 208.5

Other comprehensive income (loss) 10.1 10.1

Comprehensive income 218.6

Purchase of treasury shares ( 746 ) — ( 0.1 ) — ( 0.1 )

Stock plans 8,499 — 7.5 7.5

Cash dividends declared, $ 1.02 per common share

( 108.3 ) ( 108.3 )

Balance at January 31, 2023 106,634,289 $ 26.6 $ 5,469.4 $ 3,076.2 $ ( 237.2 ) $ 8,335.0

See notes to unaudited condensed consolidated financial statements.

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Basis of Presentation

The unaudited interim condensed consolidated financial statements of The J.M.

The unaudited interim condensed consolidated financial statements of The J.

Smucker Company (“Company,” “we,” “us,” or “our”) have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.

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In the opinion of management, all adjustments of a normal recurring nature considered necessary for a fair presentation have been included.

Operating results for the six months ended October 31, 2023, are not necessarily indicative of the results that may be expected for the year ending April 30, 2024.

Operating results for the nine months ended January 31, 2024, are not necessarily indicative of the results that may be expected for the year ending April 30, 2024.

For further information, reference is made to the consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended April 30, 2023.

Recently Issued Accounting Standards

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures .

ASU 2023-07 will improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses on an interim and annual basis.

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740) Improvements to Income Tax Disclosures .

ASU 2023-09 will improve the transparency and decision usefulness of income tax disclosures to better assess how operations and related tax risks affect tax rates and future cash flows on an interim and annual basis.

It will be effective for us on May 1, 2025, with the option to early adopt at any time prior to the effective date and will require adoption on a retrospective basis.

We are currently evaluating the impacts of the standard on our financial statements and disclosures.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures .

ASU 2023-07 will improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses on an interim and annual basis.

It will be effective for our annual period beginning May 1, 2024, and interim periods beginning May 1, 2025, with the option to early adopt at any time prior to the effective date and will require adoption on a retrospective basis.

We are currently evaluating the impacts of the standard on our financial statements and disclosures.

In July 2023, the U.S.

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SEC Release No.

33-11216 will be effective for us during the third quarter of 2024.

We do not anticipate that the adoption of these amendments will have a material impact on our financial statements and disclosures.

In May 2023, the SEC adopted the final rule under SEC Release No.

34-97424, Share Repurchase Disclosure Modernization , requiring disclosures related to issuers’ share repurchases pursuant to authorizations by the Board, inclusive of 10b5-1 plans established in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that will provide investors with enhanced information to assess the purposes and effects of the repurchases.

SEC Release No.

34-97424 would have been effective for us during the third quarter of 2024, but the SEC recently issued an order postponing the effective date.

We do not anticipate that the adoption of these amendments will have a material impact on our financial statements and disclosures.

33-11216 was effective for us on November 1, 2023, and did not have a material impact on our financial statements and disclosures.

In December 2022, the SEC adopted the final rule under SEC Release No.

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33-11042, The Enhancement and Standardization of Climate-Related Disclosures for Investors , to enhance and standardize the climate-related disclosures provided by public companies.

This update will require the disclosure of greenhouse gas emissions, including Scope 1 and Scope 2 emissions, which will be subject to third-party assurance, as well as climate-related targets and goals, and how the Board and management oversee climate-related risks.

As of October 31, 2023, these amendments were not adopted by the SEC;

however, we anticipate that the adoption of these amendments will have a material impact on our financial statements and disclosures.

During the second quarter of 2024, we announced a definitive agreement to acquire Hostess Brands, Inc.

As proposed, this update will require the disclosure of greenhouse gas emissions, including Scope 1 and Scope 2 emissions, which will be subject to third-party assurance, as well as climate-related targets and goals, and information related to how the Board and management oversee climate-related risks.

As of January 31, 2024, these amendments were not adopted by the SEC;

however, we anticipate that the adoption of these amendments would have a material impact on our financial statements and disclosures.

On November 7, 2023, we completed a cash and stock transaction to acquire Hostess Brands, Inc.

(“Hostess Brands”).

On November 7, 2023, we completed the cash and stock transaction, valued at approximately $ 5.5 billion.

The transaction was funded with new debt, inclusive of $ 3.5 billion of Senior Notes, a senior unsecured delayed-draw Term Loan Credit Agreement (“Term Loan”) of $ 800.0 , and $ 700.0 of short-term borrowings under our commercial paper program, as well as the issuance of approximately 4.0 million of our common shares valued at $ 450.2 .

For additional information on the financing associated with this transaction, refer to Note 8:

Debt and Financing Arrangements and Note 16:

The total purchase consideration in connection with the acquisition was $ 5.4 billion, which reflects an exchange offer of all outstanding shares of Hostess Brands common stock at a price of $ 34.25 per share, consisting of $ 30.00 in cash and 0.03002 shares of our common shares, based on the closing stock price on September 8, 2023, that were exchanged for each share of Hostess Brands common stock as of the transaction date.

The purchase price included the issuance of approximately 4.0 million of our common shares to Hostess Brands’ shareholders, valued at $ 450.2 , as discussed in Note 17:

Common Shares.

In addition, we paid $ 3.9 billion in cash, net of cash acquired, and assumed $ 991.0 of debt from Hostess Brands and $ 67.8 of an other debt-like item, reflecting consideration transferred for the cash payment of Hostess Brands’ employee equity awards.

New debt of $ 5.0 billion was borrowed, consisting of $ 3.5 billion in Senior Notes, a $ 800.0 senior unsecured delayed-draw Term Loan Credit Agreement (“Term Loan”), and $ 700.0 of short-term borrowings under our commercial paper program to partially fund the transaction and pay off the debt assumed as part of the acquisition.

For additional information on the financing associated with this transaction, refer to Note 9:

Debt and Financing Arrangements.

Hostess Brands is a manufacturer and marketer of sweet baked goods brands including Hostess ® Donettes ® , Twinkies ® , CupCakes , DingDongs ® , Zingers ® , CoffeeCakes , HoHos ® , Mini Muffins , and Fruit Pies , and the Voortman ® cookie brand.

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and Arkadelphia, Arkansas, a distribution facility in Edgerton, Kansas, and a commercial center of excellence in Chicago, Illinois.

Approximately 3,000 employees transitioned with the business at close of the transaction.

The purchase price will be allocated to the underlying assets acquired and liabilities assumed based upon their estimated fair values at the date of acquisition and is subject to change as we complete our analysis of their fair values during the measurement period not to exceed one year as permitted under FASB Accounting Standards Codification (“ASC”) 805, Business Combinations .

Due to the transaction closing subsequent to the second quarter of 2024, we will complete and disclose the preliminary purchase price allocation during the third quarter of 2024.

However, we anticipate the majority of the purchase price will be allocated to goodwill and other intangible assets – net.

On October 17, 2023, we entered into a definitive agreement to sell our Canada condiment business to TreeHouse Foods, Inc.

Approximately 3,000 employees transitioned with the business at the close of the transaction.

The transaction was accounted for under the acquisition method of accounting, and accordingly, the results of Hostess Brands operations, including $ 300.3 in net sales and $ 34.7 in operating income, are included within the Sweet Baked Snacks segment for the three months ended January 31, 2024.

The operating income for the three months ended January 31, 2024, includes the recognition of an unfavorable fair value purchase accounting adjustment of $ 8.1 , attributable to the acquired inventory, and excludes special project costs recognized within the segment.

The purchase price was preliminarily allocated to the underlying assets acquired and liabilities assumed based upon their estimated fair values at the date of acquisition on a provisional basis.

We determined the estimated fair values based on independent appraisals, discounted cash flow analyses, quoted market prices, and estimates made by management.

The purchase price exceeded the estimated fair value of the net identifiable tangible and intangible assets acquired and, as such, the excess was allocated to goodwill.

The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed at the acquisition date.

Assets acquired:

Cash and cash equivalents $ 135.0

Trade receivables – net 181.1

Inventories 65.9

Other current assets 7.1

Property, plant, and equipment – net 542.2

Operating lease right-of-use assets 17.2

Goodwill 2,461.1

Other intangible assets 3,036.8

Other noncurrent assets 43.5

Total assets acquired $ 6,489.9

Liabilities assumed:

Accounts payable $ 67.3

Current operating lease liabilities 4.7

Current liabilities 250.2

Deferred income taxes 655.0

Noncurrent operating lease liabilities 14.5

Other noncurrent liabilities 1.4

Total liabilities assumed 993.1

Net assets acquired $ 5,496.8

Certain estimated fair values for the acquisition, including goodwill, intangible assets, property, plant, and equipment, and income taxes, are not yet finalized.

The purchase price was preliminarily allocated based on information available at the acquisition date and is subject to change as we complete our analysis of the fair values at the date of the acquisition during the measurement period not to exceed one year, as permitted under FASB ASC 805, Business Combinations.

As a result of the acquisition, we recognized a total of $ 2.5 billion of goodwill within the Sweet Baked Snacks segment, of which $ 196.6 is expected to be deductible for tax purposes, which will be refined during the measurement period.

Goodwill represents the value we expect to achieve through the implementation of operational synergies and growth opportunities as we integrate Hostess Brands into our Company.

We are evaluating the impact of these anticipated operational synergies and growth opportunities across our reporting units and, as a result, have not allocated goodwill to our other reporting units as of January 31, 2024;

however, we will complete our evaluation and allocate goodwill, as appropriate, by the end of the measurement period.

The goodwill and indefinite-lived trademarks resulting from the acquisition are susceptible to future impairment charges.

Any significant change in our near or long-term projections or macroeconomic conditions may result in future impairment charges as the carrying values of goodwill and indefinite-lived trademarks approximate estimated fair values.

The preliminary purchase price was allocated to the identifiable intangible assets acquired as follows:

Intangible assets with finite lives:

Customer and contractual relationships ( 25 -year useful life)

Non-competition agreements (varying useful lives) 36.9

Trademarks ( 5 -year useful life)

Intangible assets with indefinite lives:

Trademarks 1,752.2

Total intangible assets $ 3,036.8

The estimated annual amortization expense for the finite-lived intangible assets based on the preliminary purchase price allocation is $ 71.6 .

Hostess Brands’ results of operations are included in our consolidated financial statements from the date of the transaction within our Sweet Baked Snacks segment.

If the transaction had occurred on May 1, 2022, unaudited pro forma consolidated results for the three and nine months ended January 31, 2024 and 2023, would have been as follows:

Three Months Ended January 31, Nine Months Ended January 31,

2024 2023 2024 2023

Net sales $ 2,253.2 $ 2,544.0 $ 6,707.1 $ 7,311.5

Net income 162.5 186.7 453.0 461.3

Net income per common share – assuming dilution 1.53 1.68 4.25 4.16

The unaudited pro forma consolidated results are based on our historical financial statements and those of Hostess Brands, and do not necessarily indicate the results of operations that would have resulted had the acquisition been completed at the beginning of the applicable period presented.

The most significant pro forma adjustments relate to the elimination of nonrecurring acquisition-related costs incurred prior to the close of the transaction, amortization of acquired intangible assets, depreciation of acquired property, plant, and equipment, and interest expense associated with acquisition-related financing.

The unaudited pro forma consolidated results do not give effect to the synergies of the acquisition and are not indicative of the results of operations in future periods.

On January 2, 202 4, we sold our Canada condiment business to TreeHouse Food s, Inc.

(“TreeHouse Foods”).

We expect the transaction to close during the third quarter of 2024, subject to customary closing conditions.

The transaction includes Bick’s ® pickles, Habitant ® pickled beets, Woodman’s ® horseradish, and McLarens ® pickled onions brands, inclusive of certain trademarks.

The transaction included Bick’s ® pickles, Habitant ® pickled beets, Woodman’s ® horseradish, and McLarens ® pickled onions brands, inclusive of certain trademarks.

Under our ownership, these brands generated net sales of approximately $ 60.0 in 2023, which were included in the International operating segment.

The transaction is valued at approximately $ 20.0 , subject to a working capital adjustment.

In accordance with FASB ASC 805, Business Combinations , the transaction does not meet the definition of a business and will be accounted for as a sale of assets, resulting in no allocation of goodwill.

Further, as of October 31, 2023, the disposal group met the criteria to be classified as held for sale, and as a result, a valuation allowance was established to reflect the fair value less costs to sell of the disposal group, which was based on the expected proceeds and the estimated carrying value of the net assets to be disposed.

The valuation allowance was included within other current assets in the Condensed Consolidated Balance Sheet and the estimated pre-tax loss on the disposal group was included within other operating expense (income) – net in the Condensed Statement of Consolidated Income and within loss (gain) on divestitures – net in the Condensed Statement of Consolidated Cash Flows.

On September 27, 2023, we entered into a definitive agreement to sell the Sahale Snacks ® business to Second Nature Brands (“Second Nature”), which closed on November 1, 2023.

The transaction included products sold under our Sahale Snacks brand, inclusive of certain trademarks and licensing agreements, a leased manufacturing facility in Seattle, Washington, and approximately 100 employees who supported the brand.

Net proceeds from the divestiture were $ 25.3 , n et of cash transaction costs and includes a receivable related to a preliminary working capital adjustment.

During the second quarter of 2024, the disposal group was classified as held for sale, and as a result, an estimated pre-tax loss of $ 5.2 was recognized with in other operating expense (income) – net in the Condensed Statement of Consolidated Income.

Upon close of the transaction during the third quarter of 2024, the pre-tax loss was adjusted to $ 5.7 , reflecting the fair value of the disposal group as of the transaction date.

On November 1, 2023, we sold our Sahale Snacks ® business to Second Nature Brands (“Second Nature”).

The transaction included products sold under our Sahale Snacks brand, inclusive of certain trademarks and licensing agreements;

a leased manufacturing facility in Seattle, Washington;

and approximately 100 employees who supported the brand.

Under our ownership, the Sahale Snacks brand generated net sales of approximately $ 48.0 in 2023, primarily included in the U.S.

Retail Consumer Foods segment.

The transaction is valued at approximately $ 34.0 , subject to a working capital adjustment.

As of October 31, 2023, the disposal group met the criteria to be classified as held for sale, and as a result, a valuation allowance was established to reflect the fair value less costs to sell of the disposal group, which was based on the expected proceeds and the estimated carrying value of the net assets to be disposed.

The following table summarizes the net assets held for sale at October 31, 2023, inclusive of a valuation allowance, reflecting fair value less costs to sell.

October 31, 2023

Sahale Snacks Condiments

Assets held for sale:

Retail Frozen Handheld and Spreads segment.

Final net proceeds from the divestiture were $ 31.6 , net of a working capital adjustment and cash transaction costs.

During the second quarter of 2024, the disposal group was classified as held for sale, and as a result, an estimated pre-tax loss of $ 6.8 was recognized within other operating expense (income) – n et in the Condensed Statement of Consolidated Income.

Upon close of the transaction during the third quarter of 2024, the pre-tax loss was adjusted to $ 6.7 , reflecting the fair value of the disposal group as of the transaction date.

The following table summarizes the net assets and liabilities disposed, which were measured at the lower of carrying amount or fair value less costs to sell.

January 31, 2024

Condiment Sahale Snacks

Assets disposed:

Inventories $ 23.9 $ 9.9

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Other noncurrent assets — 0.3

Total assets held for sale $ 44.3 $ 34.5

Liabilities held for sale:

Total assets disposed $ 31.0 $ 44.2

Liabilities disposed:

Other current liabilities $ — $ 0.8

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Other noncurrent liabilities — 1.0

Total liabilities held for sale 6.0 —

Valuation allowance ( 6.8 ) ( 5.2 )

Net assets held for sale $ 31.5 $ 29.3

Total liabilities disposed — 5.9

Net assets disposed $ 31.0 $ 38.3

On April 28, 2023, we sold certain pet food brands to Post Holdings, Inc.

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Final net proceeds from the divestiture were $ 1.2 billion, consisting of $ 683.9 in cash, net of a working capital adjustment and cash transaction costs, and approximately 5.4 million shares of Post common stock, valued at $ 491.6 at the close of the transaction.

We recognized a pre-tax loss of $ 1.0 billion upon completion of this transaction during the fourth quarter of 2023, within other operating expense (income) – net in the Statement of Consolidated Income, net of a working capital adjustment and cash transaction costs.

During 2024, we finalized the working capital adjustment and transaction costs, which resulted in an immaterial adjustment to the pre-tax loss.

Furthermore, during the first quarter of 2024, we began entering into equity forward derivative transactions under an agreement with an unrelated third party to facilitate the forward sale of the Post common stock.

All 5.4 million shares of Post common stock were hedged as of October 31, 2023, and were subsequently settled for $ 466.3 on November 15, 2023.

All 5.4 million shares of Post common stock were settled for $ 466.3 on November 15, 2023.

For additional information, see Note 11:

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Special Project Costs

Special project costs primarily consist of employee-related costs and other transition and termination costs related to certain divestiture, acquisition, integration, and restructuring activities.

Special project costs consist primarily of employee-related costs and other transition and termination costs related to certain divestiture, acquisition, integration, and restructuring activities.

Employee-related costs include severance, retention bonuses, and relocation costs.

Severance costs and retention bonuses are recognized over the estimated future service period of the impacted employees, and relocation costs are expensed as incurred.

Severance costs are generally recognized when deemed probable and estimable, retention bonuses are recognized over the estimated future service period of the impacted employees, and relocation costs are expensed as incurred.

Other transition and termination costs include fixed asset-related charges, contract and lease termination costs, professional fees, and other miscellaneous expenditures associated with divestiture, acquisition, integration, and restructuring activities.

With the exception of accelerated depreciation, these costs are expensed as incurred.

These special project costs are reported in cost of products sold, other special project costs, other debt

costs, and other income (expense) – net in the Condensed Statements of Consolidated Income and are not allocated to segment profit.

These special project costs are reported in cost of products sold, other special project costs, other debt costs, and other income (expense) – net in the Condensed

Statements of Consolidated Income and are not allocated to segment profit.

The obligation related to employee separation costs is included in other current liabilities in the Condensed Consolidated Balance Sheets.

Divestiture Costs:

We incurred $ 0.5 of employee-related costs during the three months ended October 31, 2023, related to the recently announced divestitures of our Sahale Snacks and Canada condiment businesses.

We expect to incur approximately $ 4.6 primarily in employee-related costs associated with these divestitures, all of which are expected to be cash charges and will be primarily recognized in 2024.

The obligation related to severance and retention bonuses was $ 0.5 at October 31, 2023.

Total divestiture costs related to the divested Sahale Snacks and Canada condiment businesses are anticipated to be approximately $ 6.0 and consist primarily of employee-related costs and lease termination costs, all of which are expected to be cash charges and recognized in 2024.

We incurred $ 2.3 and $ 2.8 of employee-related costs during the three and nine months ended January 31, 2024, respectively, related to these divestitures.

We also incurred $ 1.6 of other transition and termination costs during the third quarter of 2024, primarily related to lease termination costs.

The obligation related to severance and retention bonuses was $ 1.5 at January 31, 2024.

For additional information, see Note 4:

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Total integration costs related to the acquisition of Hostess Brands are anticipated to be approximately $ 210.0 and include transaction costs, employee-related costs, and other transition and termination charges.

Of the total anticipated integration costs, approximately half reflect transaction costs, with the remainder split between employee-related costs and other transition and termination charges, the majority of which are expected to be cash charges.

All integration costs are expected to be incurred by the end of 2026, with over half of the costs expected to be recognized in 2024.

We have incurred $ 26.2 of total integration costs during the three months ended October 31, 2023, all of which were cash charges and primarily related to transaction costs incurred related to a 364-day senior unsecured Bridge Term Loan Credit Facility (“Bridge Loan”) that provided committed financing for the acquisition.

Of the total anticipated integration costs, approximately half reflect transaction costs, with the remainder split between employee-related costs and other transition and termination charges.

The majority of the integration costs are expected to be cash charges incurred by the end of 2026, with over half of the costs expected to be recognized in 2024.

The following table summarizes our integration costs incurred related to the acquisition of Hostess Brands.

Three Months Ended January 31, 2024 Nine Months Ended January 31, 2024

Transaction costs $ 72.7 $ 98.9

Employee-related costs 16.3 16.3

Other transition and termination costs 5.9 5.9

Total integration costs $ 94.9 $ 121.1

Noncash charges of $ 0.1 were included in employee-related costs incurred during both the three and nine months ended January 31, 2024.

Transaction costs primarily reflect equity compensation pay-outs, legal fees, and a 364-day senior unsecured Bridge Term Loan Credit Facility (“Bridge Loan”) that provided committed financing for the acquisition of Hostess Brands.

Other transition and termination costs primarily consist of consulting fees.

The obligation related to severance and retention bonuses was $ 14.8 at January 31, 2024.

For additional information, see Note 3:

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The following table summarizes our restructuring costs incurred related to the restructuring program.

Three Months Ended October 31, 2022 Six Months Ended October 31, 2022 Total Costs Incurred to Date at April 30, 2023

Three Months Ended January 31, 2023 Nine Months Ended January 31, 2023 Total Costs Incurred to Date at April 30, 2023

Employee-related costs $ 0.3 $ 2.1 $ 27.1

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The obligation related to severance costs and retention bonuses was $ 1.6 at April 30, 2023, and was fully satisfied during the first quarter of 2024.

Cumulative noncash charges incurred through April 30, 2023, were $ 33.2 , and included $ 2.2 and $ 7.0 incurred during the three and six months ended October 31, 2022, respectively, which primarily consisted of accelerated depreciation.

Cumulative noncash charges incurred through April 30, 2023, were $ 33.2 , and included $ 3.2 and $ 10.2 incurred during the three and nine months ended January 31, 2023, respectively, which primarily consisted of accelerated depreciation.

Reportable Segments

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the manufacturing and marketing of food and beverage products.

We have three reportable segments:

We have four reportable segments:

Retail Coffee, U.S.

Retail Consumer Foods, and U.S.

Retail Pet Foods.

Retail Frozen Handheld and Spreads, U.S.

Retail Pet Foods, and Sweet Baked Snacks.

The presentation of International and Away From Home represents a combination of all other operating segments that are not individually reportable.

As disclosed in Note 3:

Acquisition, we acquired Hostess Brands in a cash and stock transaction on November 7, 2023.

The transaction resulted in a new reportable segment for 2024, Sweet Baked Snacks.

Further, the historical U.S.

Retail Consumer Foods reportable segment has been renamed to U.S.

Retail Frozen Handheld and Spreads;

however, there is no change to the manner in which the segment was previously presented.

We do not anticipate any impact to our other historical reportable segments, as we do not anticipate any changes to the internal manner in which we will manage and report these reportable segments.

Retail Coffee segment primarily includes the domestic sales of Folgers ® , Dunkin’ ® , and Café Bustelo ® branded coffee;

Retail Consumer Foods segment primarily includes the domestic sales of Smucker’s ® and Jif ® branded products;

Retail Frozen Handheld and Spreads segment primarily includes the domestic sales of Smucker’s ® and Jif ® branded products;

Retail Pet Foods segment primarily includes the domestic sales of Meow Mix ® , Milk-Bone ® , Pup-Peroni ® , and Canine Carry Outs ® branded products;

International and Away From Home includes the sale of products distributed domestically and in foreign countries through retail channels and foodservice distributors and operators (e.g., health care operators, restaurants, lodging, hospitality, offices, K-12, colleges and universities, and convenience stores).

and the Sweet Baked Snacks segment primarily includes all domestic and foreign sales of Hostess and Voortman branded products in all channels.

With the exception of Sweet Baked Snacks products, International and Away From Home includes the sale of all products that are distributed in foreign countries through retail channels, as well as domestically and in foreign countries through foodservice distributors and operators (e.g., health care operators, restaurants, lodging, hospitality, offices, K-12, colleges and universities, and convenience stores).

Segment profit represents net sales, less direct and allocable operating expenses, and is consistent with the way in which we manage our segments.

and losses on commodity and foreign currency exchange derivative activities (“change in net cumulative unallocated derivative gains and losses”), special project costs, as well as corporate administrative expenses.

However, we do not represent that the segments, if operated independently, would report operating profit equal to the segment profit set forth below, as segment profit excludes certain expenses such as amortization expense and impairment charges related to intangible assets, gains and losses on divestitures, the net change in cumulative unallocated gains and losses on commodity and foreign currency exchange derivative activities (“change in net cumulative unallocated derivative gains and losses”), special project costs, as well as corporate administrative expenses.

Commodity and foreign currency exchange derivative gains and losses are reported in unallocated derivative gains and losses outside of segment operating results until the related inventory is sold.

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We would expect that any gain or loss in the estimated fair value of the derivatives would generally be offset by a change in the estimated fair value of the underlying exposures.

Subsequent to the second quarter of 2024, we acquired Hostess Brands in a cash and stock transaction on November 7, 2023, as discussed in Note 3:

As a result, beginning with the third quarter of 2024, we will present a new reportable segment, Sweet Baked Snacks, and the U.S.

Retail Consumer Foods reportable segment will be renamed U.S.

Retail Frozen Handheld and Spreads.

With the exception of renaming the current U.S.

Retail Consumer Foods reportable segment, we do not anticipate any other changes to the internal or external reporting of our reportable segments.

The following table reconciles segment profit to income before income taxes.

Three Months Ended October 31, Six Months Ended October 31,

Three Months Ended January 31, Nine Months Ended January 31,

2024 2023 2024 2023

Retail Coffee $ 727.5 $ 735.1 $ 2,038.3 $ 2,042.8

Retail Consumer Foods 464.3 432.2 928.3 743.3

Retail Frozen Handheld and Spreads 436.8 434.2 1,365.1 1,177.5

Retail Pet Foods (A)

465.2 758.6 1,370.2 2,252.8

Sweet Baked Snacks 300.3 — 300.3 —

International and Away From Home 299.4 288.4 899.1 821.3

2 unchanged sentences

Retail Coffee $ 207.8 $ 204.0 $ 548.9 $ 537.6

Retail Consumer Foods 128.5 100.3 234.2 155.1

Retail Frozen Handheld and Spreads 104.1 94.1 338.3 249.2

Retail Pet Foods (A)

109.5 109.0 288.0 349.4

Sweet Baked Snacks 68.0 — 68.0 —

International and Away From Home 50.4 37.6 147.0 95.7

23 unchanged sentences

The following table presents certain geographical information.

Three Months Ended October 31, Six Months Ended October 31,

Three Months Ended January 31, Nine Months Ended January 31,

2024 2023 2024 2023

6 unchanged sentences

The following table presents product category information.

Three Months Ended October 31, Six Months Ended October 31,

Three Months Ended January 31, Nine Months Ended January 31,

2024 2023 2024 2023 Primary Reportable Segment (A)

2 unchanged sentences

Pet snacks 261.0 269.0 760.3 773.4 U.S.

Retail Pet Foods (C)

Retail Pet Foods (B)

Peanut butter 204.5 184.6 617.1 438.1 U.S.

Retail Consumer Foods

Retail Frozen Handheld and Spreads

Cat food 203.4 271.3 599.1 821.4 U.S.

Retail Pet Foods (C)

Retail Pet Foods (B)

Frozen handheld 182.6 172.6 573.8 501.4 U.S.

Retail Consumer Foods

Retail Frozen Handheld and Spreads

Fruit spreads 108.2 110.2 321.7 314.0 U.S.

Retail Consumer Foods

Retail Frozen Handheld and Spreads

Sweet baked goods 270.2 — 270.2 — Sweet Baked Snacks

Portion control 51.5 42.9 153.1 114.2 Other (D)

Baking mixes and ingredients 23.1 25.7 68.0 70.8 Other (D)

Toppings and syrups 21.0 21.1 67.7 67.2 U.S.

Retail Frozen Handheld and Spreads

Dog food 17.4 241.8 64.5 729.8 U.S.

Retail Pet Foods (B) (C)

Toppings and syrups 21.9 21.7 46.7 46.1 U.S.

Retail Consumer Foods

Baking mixes and ingredients 30.1 28.8 44.9 45.1 Other (D)

Cookies 30.1 — 30.1 — Sweet Baked Snacks

Other 38.6 49.4 142.3 156.9 Other (D)

1 unchanged sentence

(A) The primary reportable segment generally represents at least 75 percent of total net sales for each respective product category.

(B) During the three and six months ended October 31, 2022, the net sales within this product category were primarily related to the divested pet food brands, primarily included in the U.S.

(B) During the three and nine months ended January 31, 2024, a portion of the net sales within this product category relates to sales associated with a contract manufacturing agreement resulting from the divestiture of certain pet food brands, primarily included in the U.S.

Retail Pet Foods segment.

This agreement will continue through the remainder of 2024 and into 2025.

(C) During the three and nine months ended January 31, 2023, the net sales within this product category were primarily related to the divested pet food brands, primarily included in the U.S.

Retail Pet Foods segment.

For more information, see Note 4:

Divestitures.

(C) During the three and six months ended October 31, 2023, a portion of the net sales within this product category relates to sales associated with a contract manufacturing agreement resulting from the divestiture of certain pet food brands, primarily included in the U.S.

Retail Pet Foods segment.

This agreement will continue through the remainder of 2024 and into 2025.

(D) Primarily represents the International and Away From Home operating segments, which are combined for segment reporting purposes.

Earnings per Share

We computed net income per common share (“basic earnings per share”) under the two-class method for the three and six months ended October 31, 2023 and 2022, due to certain unvested common shares that contained non-forfeitable rights to dividends (i.e., participating securities) during these periods.

For the three and six months ended October 31, 2023 and 2022, the computation of net income per common share – assuming dilution (“diluted earnings per share”) was more dilutive under the treasury stock method, as compared to the two-class method.

We computed net income per common share (“basic earnings per share”) under the two-class method for the three and nine months ended January 31, 2024 and 2023, due to certain unvested common shares that contained non-forfeitable rights to dividends (i.e., participating securities) during these periods.

For the three and nine months ended January 31, 2024 and 2023, the computation of net income per common share – assuming dilution (“diluted earnings per share”) was more dilutive under the treasury stock method, as compared to the two-class method.

Therefore, the treasury stock method was used in accordance with FASB ASC 260, Earnings Per Share .

The following table sets forth the computation of basic and diluted earnings per share under the two-class method.

Three Months Ended October 31, Six Months Ended October 31,

Three Months Ended January 31, Nine Months Ended January 31,

2024 2023 2024 2023

8 unchanged sentences

The following table sets forth the computation of diluted earnings per share under the treasury stock method.

Three Months Ended October 31, Six Months Ended October 31,

Three Months Ended January 31, Nine Months Ended January 31,

2024 2023 2024 2023

6 unchanged sentences

Net income per common share – assuming dilution $ 1.13 $ 1.95 $ 4.81 $ 4.77

Goodwill and Other Intangible Assets

The following table summarizes the changes in our goodwill.

Retail Coffee U.S.

Retail Frozen Handheld and Spreads U.S.

Retail Pet Foods Sweet Baked Snacks International and Away From Home Total

Balance at April 30, 2023 $ 2,090.9 $ 1,147.5 $ 1,580.2 $ — $ 398.3 $ 5,216.9

Acquisition — — — 2,461.1 — 2,461.1

Divestiture — ( 7.6 ) — — ( 3.9 ) ( 11.5 )

— — — — 1.3 1.3

Balance at January 31, 2024 (B)

$ 2,090.9 $ 1,139.9 $ 1,580.2 $ 2,461.1 $ 395.7 $ 7,667.8

(A) The amounts classified as other represent foreign currency translation adjustments.

(B) Included in goodwill as of April 30, 2023, are accumulated goodwill impairment charges of $ 242.9 .

The following table summarizes our other intangible assets and related accumulated amortization and impairment charges including foreign currency exchange adjustments.

January 31, 2024 April 30, 2023

Acquisition Cost Accumulated Amortization/Impairment Charges/Foreign Currency Exchange Net Acquisition Cost Accumulated Amortization/Impairment Charges/Foreign Currency Exchange Net

Finite-lived intangible assets subject to

amortization:

Customer and contractual relationships $ 4,764.9 $ 1,840.4 $ 2,924.5 $ 3,499.0 $ 1,719.8 $ 1,779.2

Patents and technology 163.0 160.7 2.3 167.6 161.6 6.0

Trademarks 143.1 109.1 34.0 151.4 111.6 39.8

Total intangible assets subject to amortization $ 5,071.0 $ 2,110.2 $ 2,960.8 $ 3,818.0 $ 1,993.0 $ 1,825.0

Indefinite-lived intangible assets not subject to

amortization:

Trademarks $ 4,572.7 $ 223.2 $ 4,349.5 $ 2,830.7 $ 226.4 $ 2,604.3

Total other intangible assets $ 9,643.7 $ 2,333.4 $ 7,310.3 $ 6,648.7 $ 2,219.4 $ 4,429.3

We review goodwill and other indefinite-lived intangible assets for impairment at least annually on February 1, and more often if indicators of impairment exist.

As of January 31, 2024, there were no indicators of impairment, and as a result, we do not believe that any of our reporting units or material indefinite-lived intangible assets are more likely than not impaired.

The goodwill within the U.S.

Retail Pet Foods segment remains susceptible to future impairment charges due to narrow differences between fair value and carrying value.

In addition, t he goodwill and indefinite-lived trademarks within the Sweet Baked Snacks segment remain susceptible to future impairment charges, as the carrying values approximate estimated fair values due to the

recent acquisition of Hostess Brands.

Any significant adverse change in our near or long-term projections or macroeconomic conditions could result in future impairment charges for these segments.

Debt and Financing Arrangements

The following table summarizes the components of our long-term debt.

October 31, 2023 April 30, 2023

January 31, 2024 April 30, 2023

Outstanding Carrying

24 unchanged sentences

1,000.0 982.5 — —

Term Loan Credit Agreement due November 7, 2026 350.0 349.9 — —

Total long-term debt $ 8,200.0 $ 8,121.1 $ 4,350.0 $ 4,314.2

4 unchanged sentences

Voluntary prepayments are permitted without premium or penalty.

As of October 31, 2023, no balance was drawn on the Term Loan.

On November 7, 2023, the full amount was drawn on the Term Loan at an interest rate of 6.67 percent, to partially finance the acquisition of Hostess Brands, as discussed in Note 3:

Capitalized debt issuance costs associated with the Term Loan will be amortized to interest expense – net on the Condensed Statements of Consolidated Income over the time period for which the debt is outstanding.

In November 2023, the full amount was drawn on the Term Loan to partially finance the acquisition of Hostess Brands and pay off the debt assumed as part of the acquisition, as discussed in Note 3:

Capitalized debt issuance costs associated with the Term Loan will be amortized to interest expense – net in the Condensed Statements of Consolidated Income over the time period for which the debt is outstanding.

As of January 31, 2024, we prepaid $ 450.0 on the Term Loan.

The interest rate on the Term Loan at January 31, 2024, was 6.69 percent.

Subsequent to January 31, 2024, we prepaid an additional $ 100.0 on the Term Loan.

In September 2023, we entered into a commitment letter for a $ 5.2 billion Bridge Loan that provided committed financing for the acquisition of Hostess Brands, as disclosed in Note 3:

No balances were drawn against this facility, as the commitment letter was terminated after completion of the Senior Notes offering and drawing on the Term Loan.

Included in other debt costs on the Condensed Statement of Consolidated Income at October 31, 2023, was $ 19.5 related to financing fees associated with the Bridge Loan.

Included in other debt costs in the Condensed Statement of Consolidated Income during the nine months ended January 31, 2024, was $ 19.5 related to financing fees associated with the Bridge Loan.

In October 2023, we completed an offering of $ 3.5 billion in Senior Notes due November 15, 2028, November 15, 2033, November 15, 2043, and November 15, 2053.

The Senior Notes included $ 29.5 of capitalized debt issuance costs and $ 15.0 of offering discounts to be amortized to interest expense – net on the Condensed Statements of Consolidated Income over the time period for which the debt is outstanding.

The net proceeds from the offering were used to partially finance the acquisition of Hostess Brands.

All of our Senior Notes outstanding at October 31, 2023, are unsecured and interest is paid semiannually, with no required scheduled principal payments until maturity.

The Senior Notes included $ 31.8 of capitalized debt issuance costs and $ 15.0 of offering discounts to be amortized to interest expense – net in the Condensed Statements of Consolidated Income over the time period for which the debt is outstanding.

The net proceeds from the offering were used to partially finance the acquisition of Hostess Brands and pay off the debt assumed as part of the acquisition.

All of our Senior Notes outstanding at January 31, 2024, are unsecured and interest is paid semiannually, with no required scheduled principal payments until maturity.

We may prepay all or part of the Senior Notes at 100 percent of the principal amount thereof, together with the accrued and unpaid interest, and any applicable make-whole amount.

2 unchanged sentences

Prime Rate, SOFR, Euro Interbank Offered Rate, or Canadian Dealer Offered Rate, based on our election.

Interest is payable either on a quarterly basis or at the end of the borrowing term.

We did no t have a balance outstanding under the revolving credit facility at October 31, 2023, or April 30, 2023.

Interest is payable either on a quarterly basis or at the end of the

borrowing term.

We did no t have a balance outstanding under the revolving credit facility at January 31, 2024, or April 30, 2023.

We participate in a commercial paper program under which we can issue short-term, unsecured commercial paper not to exceed $ 2.0 billion at any time.

1 unchanged sentence

Commercial paper is used as a continuing source of short-term financing for general corporate purposes.

As of October 31, 2023 and April 30, 2023, we did not have a balance outstanding under the commercial paper program.

However, on November 7, 2023, we issued $ 700.0 of short-term borrowings under our commercial paper program at a weighted-average interest rate of 5.47 percent, to partially finance the acquisition of Hostess Brands.

Further, we sold all 5.4 million shares of our investment in Post common stock on November 15, 2023 for $ 466.3 , and as a result, these funds were used to partially pay down the commercial paper balance outstanding.

Interest paid totaled $ 65.2 and $ 67.9 for the three months ended October 31, 2023 and 2022, respectively, and $ 73.6 and $ 77.3 for the six months ended October 31, 2023 and 2022, respectively.

This differs from interest expense due to capitalized interest, the effect of interest rate contracts, the timing of interest payments, amortization of debt issuance costs and discounts, and the payment of other debt fees.

As of January 31, 2024, we had $ 418.0 of short-term borrowings outstanding, which were issued under our commercial paper program at weighted-average interest rate of 5.45 percent.

As of April 30, 2023, we did not have a balance outstanding.

Interest paid totaled $ 20.6 and $ 9.9 for the three months ended January 31, 2024 and 2023, respectively, and $ 94.2 and $ 87.2 for the nine months ended January 31, 2024 and 2023, respectively.

This differs from interest expense due to the timing of interest payments, capitalized interest, the effect of interest rate contracts, amortization of debt issuance costs and discounts, and the payment of other debt fees.

Our debt instruments contain covenant restrictions, including an interest coverage ratio.

As of October 31, 2023, we are in compliance with all covenants.

As of January 31, 2024, we are in compliance with all covenants.

Pensions and Other Postretirement Benefits

The components of our net periodic benefit cost for defined benefit pension and other postretirement benefit plans are shown below.

Three Months Ended October 31,

Three Months Ended January 31,

Defined Benefit Pension Plans Other Postretirement Benefits

7 unchanged sentences

Net periodic benefit cost $ 1.7 $ 3.8 $ 0.4 $ 0.4

Six Months Ended October 31,

Nine Months Ended January 31,

Defined Benefit Pension Plans Other Postretirement Benefits

7 unchanged sentences

Net periodic benefit cost $ 8.3 $ 9.2 $ 1.0 $ 1.1

In 2021, we transferred obligations of our Canadian defined benefit pension plan to an insurance company through the purchase of an irrevocable group annuity contract (the “Canadian buy-out contract”).

In 2021, we transferred obligations related to our Canadian defined benefit pension plan to an insurance company through the purchase of an irrevocable group annuity contract (the “Canadian Buy-Out Contract”).

The group annuity contract was purchased using assets from the pension trust.

During the first quarter of 2024, we received Board Resolution to proceed with distribution of the surplus that remains within the Canadian defined benefit pension plan.

During the first quarter of 2024, we received corporate approval to proceed with distribution of the surplus that remains within the Canadian defined benefit pension plan.

As a result, we recognized a noncash pre-tax settlement charge of $ 3.2 related to the acceleration of prior service cost for the portion of the plan surplus to be allocated to plan members, which is subject to regulatory approval before a payout can be made.

The settlement charge was included within other income (expense) – net in the Condensed Statement of Consolidated Income.

We did not recognize any charges related to the Canadian buy-out contract during the six months ended October 31, 2022.

During the first six months of 2023, we made contributions of $ 70.0 to increase funding for our U.S.

We did not recognize any charges related to the Canadian Buy-Out Contract during the nine months ended January 31, 2023.

During the first nine months of 2023, we made contributions of $ 70.0 to increase funding for our U.S.

qualified defined benefit pension plans.

Additionally, we made direct benefit payments of $ 1.8 for both the six months ended October 31, 2023 and 2022.

Additionally, we made direct benefit payments of $ 2.8 in both the nine months ended January 31, 2024 and 2023.

Derivative Financial Instruments

3 unchanged sentences

Commodity Derivatives:

We enter into commodity derivatives to manage the price volatility and reduce the variability of future cash flows related to anticipated inventory purchases of key raw materials, notably green coffee, soybean meal, corn, edible oils, and wheat.

We also enter into commodity derivatives to manage price risk for energy input costs, including diesel fuel and natural gas.

16 unchanged sentences

During the first quarter of 2024, we began entering into equity forward derivative transactions under an agreement with an unrelated third party to facilitate the forward sale of the Post common stock.

We do not qualify the forward sale derivative contract for hedge accounting treatment, and as a result, derivative gains and losses associated with the economic hedge are immediately recognized in earnings within other income (expense) – net in the Condensed Statement of Consolidated Income, netting with the change in fair value of the underlying shares.

We did not qualify the forward sale derivative contract for hedge accounting treatment, and as a result, derivative gains and losses associated with the economic hedge were immediately recognized in earnings within other income (expense) – net in the Condensed Statement of Consolidated Income, netting with the change in fair value of the underlying shares.

All 5.4 million shares of Post common stock were hedged as of October 31, 2023.

During the three and six months ended October 31, 2023, we recognized an unrealized gain on the transaction of $ 33.0 and $ 33.6 , respectively.

On November 15, 2023, we settled the equity forward contract for $ 466.3 .

On November 15, 2023, we settled the equity forward contract for $ 466.3 and recognized a realized pre-tax loss of $ 28.2 and gain of $ 5.4 during the three and nine months ended January 31, 2024, respectively.

For additional information, see Note 4:

1 unchanged sentence

The following table presents the gross notional value of outstanding derivative contracts.

October 31, 2023 April 30, 2023

January 31, 2024 April 30, 2023

Commodity contracts $ 312.3 $ 448.1

Foreign currency exchange contracts 106.5 98.1

Equity forward contract 432.7 —

The following tables set forth the gross fair value amounts of derivative instruments recognized in the Condensed Consolidated Balance Sheets.

October 31, 2023

January 31, 2024

Liabilities Other

2 unchanged sentences

Foreign currency exchange contracts 0.5 1.0 — —

Equity forward contract 33.6 — — —

Total derivative instruments $ 3.4 $ 8.7 $ — $ —

6 unchanged sentences

We have elected to not offset fair value amounts recognized for our exchange-traded derivative instruments and our cash margin accounts executed with the same counterparty that are generally subject to enforceable netting agreements.

required to maintain cash margin accounts in connection with funding the settlement of our open positions.

Our cash margin accounts represented collateral pledged of $ 11.5 and $ 17.0 at October 31, 2023, and April 30, 2023, respectively, and are included in other current assets in the Condensed Consolidated Balance Sheets.

We are required to maintain cash margin accounts in connection with funding the settlement of our open positions.

Our cash margin accounts represented collateral pledged of $ 19.1 and $ 17.0 at January 31, 2024, and April 30, 2023, respectively, and are included in other current assets in the Condensed Consolidated Balance Sheets.

The change in the cash margin accounts is included in other – net, investing activities in the Condensed Statements of Consolidated Cash Flows.

3 unchanged sentences

The following table presents the net gains and losses recognized in cost of products sold in the Condensed Statements of Consolidated Income on derivatives not designated as hedging instruments.

Three Months Ended October 31, Six Months Ended October 31,

Three Months Ended January 31, Nine Months Ended January 31,

2024 2023 2024 2023

5 unchanged sentences

The following table presents the net change in cumulative unallocated derivative gains and losses.

Three Months Ended October 31, Six Months Ended October 31,

Three Months Ended January 31, Nine Months Ended January 31,

2024 2023 2024 2023

2 unchanged sentences

Change in net cumulative unallocated derivative gains and losses $ ( 5.2 ) $ 17.5 $ ( 21.1 ) $ ( 43.4 )

Net cumulative unallocated derivative gains and losses net to zero at October 31, 2023 and were $ 15.9 at April 30, 2023.

Net cumulative unallocated derivative losses were $ 5.2 at January 31, 2024, and net cumulative unallocated derivative gains were $ 15.9 at April 30, 2023.

Cash Flow Hedges

In November 2023, we terminated interest rate contracts for $ 42.5 concurrent with the payment of the debt assumed with the acquisition of Hostess Brands.

The interest rate contracts were designated as cash flow hedges and were used to manage exposure to changes in cash flows associated with variable rate debt.

In 2020, we terminated all outstanding interest rate contracts concurrent with the pricing of the Senior Notes due March 15, 2030, and March 15, 2050.

2 unchanged sentences

The following table presents information on the pre-tax gains and losses recognized on all contracts previously designated as cash flow hedges.

Three Months Ended October 31, Six Months Ended October 31,

Three Months Ended January 31, Nine Months Ended January 31,

2024 2023 2024 2023

3 unchanged sentences

Change in accumulated other comprehensive income (loss) $ 3.3 $ 3.4 $ 10.1 $ 10.2

(A) Interest expense – net, as presented in the Condensed Statements of Consolidated Income was $ 35.1 and $ 39.7 for the three months ended October 31, 2023 and 2022, respectively, and $ 67.2 and $ 78.8 for the six months ended October 31, 2023 and 2022, respectively.

(A) Interest expense – net, as presented in the Condensed Statements of Consolidated Income was $ 99.8 and $ 37.9 for the three months ended January 31, 2024 and 2023, respectively, and $ 167.0 and $ 116.7 for the nine months ended January 31, 2024 and 2023, respectively.

The reclassification includes terminated contracts which were designated as cash flow hedges.

Included as a component of accumulated other comprehensive income (loss) at October 31, 2023, and April 30, 2023, were deferred net pre-tax losses of $ 193.9 and $ 200.7 , respectively, related to the terminated interest rate contracts.

The related net tax benefit recognized in accumulated other comprehensive income (loss) at October 31, 2023, and April 30, 2023, was $ 45.5 and $ 47.1 , respectively.

Included as a component of accumulated other comprehensive income (loss) at January 31, 2024, and April 30, 2023, were deferred net pre-tax losses of $ 190.6 and $ 200.7 , respectively, related to the terminated interest rate contracts.

The related net tax benefit recognized in accumulated other comprehensive income (loss) at January 31, 2024, and April 30, 2023, was $ 45.2 and $ 47.1 , respectively.

Approximately $ 13.6 of the net pre-tax loss will be recognized over the next 12 months related to the terminated interest rate contracts.

Other Financial Instruments and Fair Value Measurements

Financial instruments, other than derivatives, that potentially subject us to significant concentrations of credit risk consist principally of cash investments and trade receivables.

Financial instruments, other than derivatives, that potentially subject us to significant concentrations of credit risk consist principally of cash investments, short-term borrowings, and trade receivables.

The carrying value of these financial instruments approximates fair value.

1 unchanged sentence

The following table provides information on the carrying amounts and fair values of our financial instruments.

October 31, 2023 April 30, 2023

January 31, 2024 April 30, 2023

Amount Fair Value Carrying

13 unchanged sentences

(Level 2) Significant

(Level 3) Fair Value at October 31, 2023

(Level 3) Fair Value at January 31, 2024

Marketable securities and other investments:

5 unchanged sentences

Foreign currency exchange contracts – net 0.2 ( 0.7 ) — ( 0.5 )

Equity forward contract – net — 33.6 — 33.6

Investment in equity securities (C)

432.7 — — 432.7

Total long-term debt (D)

23 unchanged sentences

Based on the short-term nature of these money market funds, carrying value approximates fair value.

As of October 31, 2023, our municipal obligations are scheduled to mature as follows:

As of January 31, 2024, our municipal obligations are scheduled to mature as follows:

$ 0.2 in 2024, $ 1.3 in 2025, $ 0.8 in 2026, $ 4.5 in 2027, $ 0.4 in 2028, and the remaining $ 10.1 in 2029 and beyond.

(B) Level 1 commodity and foreign currency exchange derivatives are valued using quoted market prices for identical instruments in active markets.

Level 2 commodity, foreign currency exchange, and equity forward derivatives are valued using quoted prices for similar assets or liabilities in active markets.

The unrealized pre-tax gain on the equity forward derivative was included in other income (expense) – net in the Condensed Statement of Consolidated Income.

In addition, all 5.4 million shares of Post common stock were hedged as of October 31, 2023.

On November 15, 2023, we settled the equity forward contract for $ 466.3 .For additional information, see Note 10:

Derivative Financial Instruments.

Level 2 commodity and foreign currency exchange derivatives are valued using quoted prices for similar assets or liabilities in active markets.

The investment in equity securities represents our equity interest in Post of approximately 9 percent as of October 31, 2023, which is valued using the trading value of Post common stock.

During the six months ended October 31, 2023, we recognized an unrealized pre-tax loss of $ 55.1 on the investment, which was included in other income (expense) – net in the Condensed Statement of Consolidated Income.

On November 15, 2023, we sold all 5.4 million shares of Post common stock, and they settled for $ 466.3 .

The investment in equity securities represented our equity interest in Post of approximately 8 percent as of April 30, 2023, which was valued using the trading value of Post common stock.

On November 15, 2023, we settled the equity forward contract that hedged all 5.4 million shares of Post common stock for $ 466.3 .

The investment in equity securities was valued at $ 460.9 on the settlement date.

As a result, we recognized a realized pre-tax loss of $ 30.7 on the investment, of which a gain of $ 28.2 and loss of $ 26.9 was recognized during the three and nine months ended January 31, 2024, respectively, which was included in other income (expense) – net in the Condensed Statement of Consolidated Income.

For additional information, see Note 4:

Divestitures.

(D) Long-term debt is composed of public Senior Notes, which are traded in an active secondary market and valued using quoted prices.

(D) Long-term debt is composed of public Senior Notes classified as Level 1 and the Term Loan classified as Level 2.

The public Senior Notes are traded in an active secondary market and valued using quoted prices.

The fair value of the Term Loan is based on the net present value of each interest and principle payment calculated utilizing an interest rate derived from an estimated yield curve obtained from independent pricing sources for similar types of term loan borrowing arrangements.

For additional information, see Note 9:

Debt and Financing Arrangements.

As of October 31, 2023, the Sahale Snacks and Canada condiment business disposal groups met the criteria to be classified as held for sale, and as a result, a valuation allowance of $ 6.8 and $ 5.2 , respectively, were established to reflect the fair value less costs to sell of the disposal groups, which was based on the expected proceeds and the estimated carrying value of the net assets to be disposed.

The estimated pre-tax loss on the disposal groups were included within other operating expense (income) – net in the Condensed Statement of Consolidated Income.

During the second quarter of 2024, the disposal groups for the Sahale Snacks and Canada condiment businesses were classified as held for sale, and as a result, an estimated pre-tax loss of $ 6.8 and $ 5.2 were recognized within other expense (income) – net in the Condensed Statement of Consolidated Income, respectively.

Upon close of the transactions during the third quarter of 2024, the pre-tax losses were adjusted to $ 6.7 and $ 5.7 , respectively, reflecting the fair values of the disposal groups as of the transaction dates.

We utilized Level 3 inputs based on management’s best estimates and assumptions to estimate the fair value of the disposal groups.

Furthermore, t he pre-tax loss for the divested Sahale Snacks business included the impact of an

allocation of $ 11.5 of goodwill, primarily in the U.S.

Retail Frozen Handheld and Spreads segment, which was determined based on a relative fair value analysis.

For additional information, see Note 4:

Divestitures.

Divestitures and Note 8:

Goodwill and Other Intangible Assets.

Furthermore, we acquired Hostess Brands on November 7, 2023, and as a result, the underlying assets acquired and liabilities assumed were adjusted to their estimated fair values at the date of acquisition, which was determined based on independent appraisals, discounted cash flow analyses, quoted market prices, and estimates made by management.

For additional information, see Note 3:

We lease certain warehouses, manufacturing facilities, office space, equipment, and vehicles, primarily through operating lease agreements.

11 unchanged sentences

We consider our credit rating and the current economic environment in determining this collateralized rate.

As of October 31, 2023, we have entered into operating lease commitments related to one distribution center and one commercial property for which the leases have not yet commenced as of that date.

The leases will begin during the third quarter of 2024, and upon commencement, we expect to recognize aggregate right-of-use assets and lease liabilities of approximately $ 12.0 in the Condensed Consolidated Balance Sheet.

In addition, as of October 31, 2023, we have entered into a financing lease commitment related to equipment for which the lease has not yet commenced as of that date.

The lease will begin during the third quarter of 2024, and upon commencement, we expect to recognize a right-of-use asset and lease liability of approximately $ 1.1 in the Condensed Consolidated Balance Sheet.

The following table sets forth the right-of-use assets and lease liabilities recognized in the Condensed Consolidated Balance Sheets.

October 31, 2023 April 30, 2023

January 31, 2024 April 30, 2023

Operating lease right-of-use assets $ 182.3 $ 103.0

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The following table summarizes the components of lease expense.

Three Months Ended October 31, Six Months Ended October 31,

Three Months Ended January 31, Nine Months Ended January 31,

2024 2023 2024 2023

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Interest on lease liabilities

0.1 0.1 0.4 0.1

Variable lease cost 6.4 7.2 17.6 18.9

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The following table sets forth cash flow and noncash information related to leases.

Six Months Ended October 31,

Nine Months Ended January 31,

Cash paid for amounts included in the measurement of lease liabilities:

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The following table summarizes the maturity of our lease liabilities by fiscal year.

October 31, 2023

January 31, 2024

Operating Leases Finance Leases

9 unchanged sentences

The following table sets forth the weighted average remaining lease term and discount rate.

October 31, 2023 April 30, 2023

January 31, 2024 April 30, 2023

Weighted average remaining lease term (in years):

4 unchanged sentences

Finance leases

The effective income tax rates for the three months ended October 31, 2023 and 2022, were 21.9 and 24.4 percent, respectively, and for the six months ended October 31, 2023 and 2022, were 22.4 and 23.6 percent, respectively.

During the three and six months ended October 31, 2023, the effective income tax rates varied from the U.S.

statutory income tax rate of 21.0 percent primarily due to state income taxes, partially offset by the recognition of a deductible outside basis difference related to the divestiture of the Sahale Snacks brand, which was classified as held for sale as of October 31, 2023, as discussed in Note 4:

Divestitures.

During the three and six months ended October 31, 2022, the effective income tax rate varied from the U.S.

The effective income tax rates for the three months ended January 31, 2024 and 2023, were 38.4 and 24.3 percent, respectively, and for the nine months ended January 31, 2024 and 2023, were 27.0 and 23.9 percent, respectively.

During the three and nine months ended January 31, 2024, the effective income tax rates varied from the U.S.

statutory income tax rate of 21.0 percent primarily due to state income taxes and unfavorable tax impacts associated with the acquisition of Hostess Brands.

The effective income tax rate for the nine months ended January 31, 2024, also included a favorable tax impact of the divested Sahale Snacks business.

During the three and nine months ended January 31, 2023, the effective income tax rate varied from the U.S.

statutory income tax rate of 21.0 percent primarily due to state income taxes.

We are a voluntary participant in the Compliance Assurance Process (“CAP”) program offered by the Internal Revenue Service (“IRS”) and are currently under a CAP examination for the tax years ended April 30, 2023, and April 30, 2024.

During the three months ended January 31, 2024, the IRS concluded the CAP examinations for the 2019 through 2022 tax years.

Within the next 12 months, it is reasonably possible that we could decrease our unrecognized tax benefits by an estimated $ 2.5 , primarily as a result of the expiration of statute of limitation periods.

As part of the acquisition of Hostess Brands, we assumed a tax receivable agreement payable to C.

Dean Metropoulos and entities under his control.

Subsequent to the acquisition, we terminated all future payments under the tax receivable agreement in exchange for a cash payment of $ 86.4 , which was recognized as a financing outflow in the Condensed Statement of Consolidated Cash Flows for the nine months ended January 31, 2024.

Accumulated Other Comprehensive Income (Loss)

12 unchanged sentences

Income tax benefit (expense) — ( 1.9 ) ( 0.2 ) ( 0.1 ) ( 2.2 )

Balance at October 31, 2023 $ ( 40.9 ) $ ( 148.4 ) $ ( 52.2 ) $ 1.0 $ ( 240.5 )

Balance at January 31, 2024 $ ( 31.9 ) $ ( 145.4 ) $ ( 51.7 ) $ 1.6 $ ( 227.4 )

Adjustment Net Gains (Losses)

10 unchanged sentences

Income tax benefit (expense) — ( 2.4 ) ( 0.6 ) 0.2 ( 2.8 )

Balance at October 31, 2022 $ ( 36.1 ) $ ( 158.8 ) $ ( 53.3 ) $ 0.9 $ ( 247.3 )

Balance at January 31, 2023 $ ( 29.6 ) $ ( 156.1 ) $ ( 52.7 ) $ 1.2 $ ( 237.2 )

(A) The reclassification from accumulated other comprehensive income (loss) is composed of deferred gains (losses) related to terminated interest rate contracts which were reclassified to interest expense – net.

6 unchanged sentences

We, like other food manufacturers, are from time to time subject to various administrative, regulatory, and other legal proceedings arising in the ordinary course of business.

We are currently a defendant in a variety of such legal proceedings, and while we cannot predict with certainty the ultimate results of these proceedings or potential settlements associated with these or other matters, we have accrued losses for certain contingent liabilities that we have determined are probable and reasonably estimable at October 31, 2023.

Based on the information known to date, with the exception of the matters discussed below, we do not believe the final outcome of these proceedings will have a material adverse effect on our financial position, results of operations, or cash flows.

4 unchanged sentences

The outcome and the financial impact of these cases, if any, cannot be predicted at this time.

Accordingly, no loss contingency has been recorded for these matters as of October 31, 2023, and the likelihood of loss is not considered probable or estimable.

Accordingly, no loss contingency has been recorded for these matters as of January 31, 2024, and the likelihood of loss is not considered probable or reasonably estimable.

However, if we are required to pay significant damages, our business and financial results could be adversely impacted, and sales of those products could suffer not only in these locations but elsewhere.

1 unchanged sentence

In May 2022, we initiated a voluntary recall of select Jif peanut butter products produced at our Lexington, Kentucky facility and sold primarily in the U.S., due to potential salmonella contamination.

At that time, we also suspended the manufacturing of Jif peanut butter products at the Lexington facility and temporarily paused shipments from our Memphis, Tennessee facility.

No other products produced at our other facilities were affected by the recall.

In June 2022, we resumed manufacturing at our Lexington facility, as well as shipping from our Memphis facility.

We partnered with retailers to restock

Jif peanut butter products during the first quarter of 2023 and returned to normal levels at the end of 2023.

At that time, we also suspended the manufacturing of Jif peanut butter products at the Lexington facility.

We partnered with retailers to restock Jif peanut butter products during the first quarter of 2023 and returned to normal levels at the end of 2023.

We recognized total direct costs associated with the recall of approximately $ 120.0 , net of insurance recoveries, related to customer returns, fees, unsaleable inventory, and other product recall-related costs, primarily within our U.S.

Retail Consumer Foods segment.

Approximately $ 25.0 and $ 90.0 of direct costs were recognized during the three and six months ended October 31, 2022, and no significant direct costs were recognized during the three and six months ended October 31, 2023.

Retail Frozen Handheld and Spreads segment.

Approximately $ 20.0 and $ 110.0 of direct costs were recognized during the three and nine months ended January 31, 2023, respectively, and no significant direct costs were recognized during 2024.

Further, the U.S.

5 unchanged sentences

The outcome and financial impact of the ongoing consumer litigation or any potential regulatory action associated with the Jif voluntary recall cannot be predicted at this time.

Accordingly, no loss contingency has been recorded for these matters as of October 31, 2023, and the likelihood of loss is not considered probable or estimable.

Accordingly, no loss contingency has been recorded for these matters as of January 31, 2024, and the likelihood of loss is not considered probable or reasonably estimable.

Voortman Contingency:

In December 2020, Hostess Brands asserted claims for indemnification against the sellers (the “Sellers”) under the terms of a Share Purchase Agreement (the “Purchase Agreement”) pursuant to which Hostess Brands acquired Voortman Cookies Limited (“Voortman”).

The claims were for damages arising out of alleged breaches by the Sellers of certain representations, warranties and covenants contained in the Purchase Agreement relating to periods prior to the closing of the acquisition.

Hostess Brands also submitted claims relating to these alleged breaches under the representation and warranty insurance policy (“RWI”) that was purchased in connection with the acquisition.

In the third quarter of calendar 2022, the RWI insurers paid Hostess Brands $ 42.5 CAD (the RWI coverage limit) (the “Proceeds”) related to these breaches.

Per agreement with the RWI insurers, under no circumstances would we be required to return the Proceeds.

On November 3, 2022, pursuant to the agreement with the RWI insurers, Voortman brought claims in the Ontario (Canada) Superior Court of Justice (the “Claim”), related to the breaches against certain of the Sellers.

The Claim alleges the seller defendants made certain non-disclosures and misrepresentations to induce Hostess Brands to overpay for Voortman.

We are seeking damages of $ 109.0 CAD representing the amount of the aggregate liability of the Sellers for indemnification under the Purchase Agreement, $ 5.0 CAD in punitive or aggravated damages, interest, proceedings fees, and any other relief the presiding

court deems appropriate.

A portion of any recovery will be shared with the RWI insurers.

Although we believe that the Claim is meritorious, no assurance can be given as to whether we will recover all, or any part, of the amounts being pursued.

Common Shares

The following table sets forth common share information.

October 31, 2023 April 30, 2023

January 31, 2024 April 30, 2023

Common shares authorized 300.0 300.0

4 unchanged sentences

In accordance with the 10b5-1 Plan, our designated broker had the authority to repurchase approximately 2.4 million common shares, which commenced upon the sale of certain pet food brands on April 28, 2023, and expired 45 calendar days after the closure of the transaction.

During the six months ended October 31, 2023, we repurchased approximately 2.4 million common shares for $ 362.8 under the 10b5-1 Plan, and approximately 1.1 million common shares remain available for repurchase.

During the nine months ended January 31, 2024, we repurchased approximately 2.4 million common shares for $ 362.8 under the 10b5-1 Plan, and approximately 1.1 million common shares remain available for repurchase.

In accordance with The Inflation Reduction Act of 2022, H.R.

1 unchanged sentence

As a result, an excise tax of $ 3.6 was accrued on the repurchased shares during the first quarter of 2024, and included within additional capital in our Condensed Consolidated Balance Sheet.

During the six months ended October 31, 2022, we did not repurchase any common shares under a repurchase plan authorized by the Board.

All other share repurchases during the six months ended October 31, 2023 and 2022, consisted of shares repurchased from stock plan recipients in lieu of cash payments.

On November 7, 2023, we acquired Hostess Brands, and as a result, we issued approximately 4.0 million common shares valued at $ 450.2 in exchange for the outstanding shares of Hostess Brands common stock.

The shares issued were based on each outstanding share of Hostess Brands common stock receiving $ 30.00 per share in cash and 0.03002 shares of our common shares, which represents a value of $ 4.25 based on the closing stock price of our common shares on September 8, 2023, the last trading day preceding September 11, 2023, the date on which the execution of the Hostess Brands merger agreement was publicly announced.

During the nine months ended January 31, 2023, we did not repurchase any common shares under a repurchase plan authorized by the Board.

All other share repurchases during the nine months ended January 31, 2024 and 2023, consisted of shares repurchased from stock plan recipients in lieu of cash payments.

Shares Issued:

The shares issued were based on each outstanding share of Hostess Brands common stock receiving $ 30.00 per share in cash and 0.03002 shares of our common shares, which represented a value of $ 4.25 based on the closing stock price of our common shares on September 8, 2023, the last trading day preceding September 11, 2023, the date on which the execution of the Hostess Brands merger agreement was publicly announced.

For additional information on the acquisition of Hostess Brands, see Note 3:

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements